Why hadn't Bail heard of the Sith? They were involved in practically every major war in Republic history. Did he somehow become a Senator without the least bit of understanding of galactic history?
There's a group called the Jedi Shadows (look them up on Wookieepedia) who are dedicated to destroying any traces of the Sith and their followers. It may be that they did their work so well that most people who aren't Jedi or historians by trade haven't heard of them. Palpatine and the previous Rule of Two Sith may also have helped with this effort to preserve their anonymity.